<PAGE>

                               FORM 10-QSB



               Quarterly Report Under Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

                 For the quarterly period ended October 31, 2000

                           Commission File No. 1-8125


                                  TOROTEL, INC.
        (Exact name of small business issuer as specified in its charter)


           MISSOURI                                   44-0610086
(State or other jurisdiction of            (IRS Employer Identification No.)
 incorporation or organization)


                13402 SOUTH 71 HIGHWAY, GRANDVIEW, MISSOURI 64030
                    (Address of principal executive offices)


                                 (816) 761-6314
                           (Issuer's telephone number)


                                      NONE
      (Former name, former address and former fiscal year, if change since
                                  last report)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months and (2) has been
subject to such filing requirements for the past 90 days.

                                Yes X         No
                                   ---           ----

As of December 1, 2000, there were 2,811,590 shares of Common Stock, $.50 Par
Value, outstanding.



<PAGE>


                         TOROTEL, INC. AND SUBSIDIARIES


                                      INDEX

<TABLE>
<CAPTION>

<S>                                                                                                 <C>

PART I.    FINANCIAL INFORMATION

      Item 1.   Financial Statements

           Consolidated Balance Sheet as of October 31, 2000                                           1

           Consolidated Statements of Operations for the six months
                ended October 31, 2000 and 1999                                                        2

           Consolidated Statements of Operations for the three months
                ended October 31, 2000 and 1999                                                        3

           Consolidated Statements of Cash Flows for the six months
               ended October 31, 2000 and 1999                                                         4

           Notes to Consolidated Financial Statements                                                  5

      Item 2.   Management's Discussion and Analysis of Plan of Operation                             10



PART II.   OTHER INFORMATION

      Item 1.   Legal Proceedings                                                                     13

      Item 4.   Submission of Matters to a Vote of Security Holders                                   13

      Item 6.   Exhibits and Reports on Form 8-K                                                      13



SIGNATURES                                                                                            14

</TABLE>


<PAGE>


PART I.    FINANCIAL INFORMATION


Item 1.    Financial Statements

CONSOLIDATED BALANCE SHEET (Unaudited)
As of October 31, 2000


<TABLE>
<CAPTION>

<S>                                                              <C>
ASSETS

Current assets:
     Cash                                                          $    140,000
     Accounts receivable, net                                           425,000
     Current maturity of note receivable (Notes 10 and 11)              136,000
     Inventories (Note 3)                                               237,000
     Prepaid expenses and other current assets                           51,000

                                                                        989,000

Property, plant and equipment, net                                      355,000

Note receivable (Notes 10 and 11)                                       240,000

Other assets                                                              6,000
                                                                   ------------
                                                                   $  1,590,000
                                                                   =============
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
     Current maturities of long-term debt (Notes 5 and 10)         $    238,000
     Trade accounts payable (Note 10)                                   859,000
     Accrued liabilities (Note 10)                                      288,000
                                                                   ------------
                                                                      1,385,000

Long-term debt, less current maturities (Notes 5 and 10)                539,000

Note and interest payable to former officer (Note 9)                    541,000

Stockholders' deficit (Notes 6, 7 and 8):
     Common stock, at par value                                          29,000
     Capital in excess of par value                                  10,085,000
     Accumulated deficit                                            (10,784,000)
                                                                   ------------
                                                                       (670,000)
     Less treasury stock, at cost                                       205,000
                                                                   ------------
                                                                       (875,000)
                                                                   ------------
                                                                   $  1,590,000
                                                                   ============
</TABLE>

         The accompanying notes are an integral part of this statement.





                                        1


<PAGE>


CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended October 31,

<TABLE>
<CAPTION>

                                                        2000             1999
                                                    -----------     -----------
<S>                                             <C>              <C>
Net sales                                           $ 1,695,000     $ 1,663,000
Cost of goods sold                                    1,077,000       1,205,000
                                                    -----------     -----------

     Gross profit                                       618,000         458,000

Operating expenses:
     Engineering                                         84,000          90,000
     Selling, general and administrative                387,000         386,000
                                                    -----------     -----------
                                                        471,000         476,000
                                                    -----------     -----------

     Earnings (loss) from operations                    147,000         (18,000)

Other expense (income):
     Interest expense                                    54,000          56,000
     Interest income                                    (18,000)        (18,000)
     Other, net                                          (2,000)           --
                                                    -----------     -----------
                                                         34,000          38,000
                                                    -----------     -----------

     Earnings (loss) from operations before
         provision for income taxes                     113,000         (56,000)

Provision for income taxes (Note 4)                        --              --
                                                    -----------     -----------

Net earnings (loss)                                 $   113,000     $   (56,000)
                                                    ===========     ===========


Basic earnings (loss) per share (Note 6)            $       .04     $      (.02)
                                                    ===========     ===========
Diluted earnings (loss) per share (Note 6)          $       .04     $      (.02)
                                                    ===========     ===========

</TABLE>

        The accompanying notes are an integral part of these statements.



                                        2


<PAGE>


CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended October 31,

<TABLE>
<CAPTION>
                                                            2000         1999
                                                       ---------      ---------
<S>                                                  <C>           <C>
Net sales                                              $ 840,000      $ 874,000
Cost of goods sold                                       526,000        597,000
                                                       ---------      ---------
     Gross profit
                                                         314,000        277,000

Operating expenses:
     Engineering                                          42,000         45,000
     Selling, general and administrative                 195,000        194,000
                                                       ---------      ---------
                                                         237,000        239,000
                                                       ---------      ---------

     Earnings from operations                             77,000         38,000

Other expense (income):
     Interest expense                                     27,000         27,000
     Interest income                                     (10,000)        (9,000)
     Other, net                                           (2,000)          --
                                                       ---------      ---------
                                                          15,000         18,000
                                                       ---------      ---------

     Earnings from operations before
         provision for income taxes                       62,000         20,000
Provision for income taxes (Note 4)                         --             --
                                                       ---------      ---------
Net earnings                                           $  62,000      $  20,000
                                                       =========      =========
Basic earnings per share (Note 6)                      $     .02      $     .01
                                                       =========      =========
Diluted earnings per share (Note 6)                    $     .02      $     .01
                                                       =========      =========

</TABLE>


        The accompanying notes are an integral part of these statements.



                                        3


<PAGE>


CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended October 31,

<TABLE>
<CAPTION>

                                                                              2000         1999
                                                                          ---------    ---------
<S>                                                                   <C>            <C>
Cash flows from operating activities:
     Net earnings (loss)                                                  $ 113,000    $ (56,000)
     Adjustments to reconcile net earnings (loss) to net cash
       provided by operations:
           Depreciation and amortization                                     42,000       56,000
           Increase (decrease) in cash flows from operations
              resulting from changes in:
                Accounts receivable                                         (11,000)     132,000
                Interest income receivable                                     --         (3,000)
                Inventories                                                 (37,000)     174,000
                Prepaid expenses and other assets                           (47,000)     (49,000)
                Trade accounts payable                                       13,000        5,000
                Accrued liabilities                                          (5,000)     (17,000)
                                                                          ---------    ---------
Net cash provided by operating activities                                    68,000      242,000
                                                                          ---------    ---------
Cash flows from investing activities:
     Capital expenditures                                                      --         (2,000)
     Proceeds from note receivable                                           65,000         --
                                                                          ---------    ---------
Net cash provided by (used in) investing activities                          65,000       (2,000)
                                                                          ---------    ---------
Cash flows from financing activities:
     Principal payments on long-term debt                                  (103,000)    (175,000)
     Payments on capital lease obligations                                   (6,000)     (10,000)
     Note and interest payable to former officer                             21,000       21,000
                                                                          ---------    ---------
Net cash used in financing activities                                       (88,000)    (164,000)
                                                                          ---------    ---------
Net increase in cash                                                         45,000       76,000
Cash at beginning of period                                                  95,000       51,000
                                                                          ---------    ---------
Cash at end of period                                                     $ 140,000    $ 127,000
                                                                          =========    =========


Supplemental Disclosures of Cash Flow Information Cash
     paid during the period for:
         Interest                                                         $  31,000    $  36,000
         Income taxes                                                     $    --      $    --
</TABLE>

        The accompanying notes are an integral part of these statements.


                                        4


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


Note 1 - Basis of Presentation

      Torotel specializes in the custom design and manufacture of a wide variety
of precision magnetic components, consisting of transformers, inductors,
reactors, chokes and toroidal coils. Approximately 90% of Torotel's sales are
derived from domestic customers. The accompanying unaudited consolidated
financial statements reflect the normal recurring adjustments which are, in the
opinion of management, necessary to present fairly Torotel's financial position
at October 31, 2000, and the results of operations for the three and six months
ended October 31, 2000.

      The financial statements contained herein should be read in conjunction
with Torotel's financial statements and related notes filed on Form 10-KSB for
the year ended April 30, 2000.


Note 2 - Realization of Assets

      The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplate
continuation of Torotel as a going concern. While Torotel's profitability has
improved during the past few quarters, the effect of the substantial operating
losses incurred in the fiscal years ended April 30, 1999, 1998 and 1997,
continues to cloud Torotel's outlook. While continuing operations have provided
cash in the last three years, the uncertainty surrounding the outstanding
liabilities associated with (i) a terminated merger in fiscal 1999; (ii) the
trade debt of a discontinued subsidiary (see Note 10 of Notes to Consolidated
Financial Statements); and (iii) the note and interest payable to a former
officer (see Note 9 of Notes to Consolidated Financial Statements), raises doubt
about Torotel's ability to continue as a going concern. While there is no
immediate plan to secure any new financing or capital, management continues to
evaluate ways of improving Torotel's liquidity.

      In view of the matters described in the preceding paragraph,
recoverability of a major portion of the recorded asset amounts shown in the
accompanying consolidated balance sheet is dependent upon continued operations
of Torotel, which in turn is dependent upon Torotel's ability to meet its
financing requirements on a continuing basis, to maintain present financing, and
to succeed in its future operations. The consolidated financial statements do
not include any adjustment relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that might
be necessary should Torotel be unable to continue in existence.


Note 3 - Inventories

      The components of inventories are summarized as follows:

<TABLE>

<S>                      <C>
Raw materials               $ 57,000
Work in process              168,000
Finished goods                12,000
                            --------
                            $237,000
                            ========

</TABLE>

                                        5


<PAGE>


Note 4 - Income Taxes

      The company has net operating loss carryforwards available as benefits to
reduce future income taxes, subject to applicable limitations. These operating
loss carryforwards expire in various amounts in the years 2001 through 2014.

      The difference between the financial and tax bases of assets and
liabilities is determined annually. Deferred income taxes and liabilities are
computed for those differences that have future tax consequences using the
currently enacted tax laws and rates that apply to the periods in which they are
expected to affect taxable income. Valuation allowances are established, if
necessary, to reduce the deferred tax asset to the amount that will, more likely
than not, be realized. Income tax expense is the current tax payable or
refundable for the period plus or minus the net change in the deferred tax
assets or liabilities.

      The following table summarizes the components of the net deferred tax
asset:

<TABLE>

<S>                                                       <C>
   Net operating loss carryforwards                           $2,862,000
   Inventory valuation reserve                                   201,000
   Tax credit carryforwards                                       58,000
   Other                                                          42,000
                                                              -----------
                                                               3,163,000
   Less valuation allowance                                    3,163,000
                                                              -----------
                                                              $      --
                                                              ===========

</TABLE>

Note 5 - Financing Agreements

      Under the terms of a loan agreement with Vista Bank, N.A. (formerly named
Phillipsburg National Bank & Trust Company), Torotel is required to comply with
certain covenants. The bank has modified these covenants based on the revised
corporate structure subsequent to the sale of ECH assets and the settlement with
the U.S. government (see Notes 9 and 10 of Notes to Consolidated Financial
Statements). As of October 31, 2000, Torotel was in compliance with these
covenants.


Note 6 - Earnings Per Share

      Statement of Financial Accounting Standards (SFAS) No. 128, EARNINGS PER
SHARE, requires dual presentation of basic and diluted EPS on the face of the
statement of earnings regardless of whether basic and diluted EPS are the same;
and requires a reconciliation of the numerator and denominator used in computing
basic and diluted EPS. Basic EPS excludes dilution and is computed by dividing
earnings available to common stockholders by the weighted average number of
common shares outstanding for the period. Diluted EPS is computed similarly to
fully diluted EPS pursuant to APB Opinion 15. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity. Pursuant to SFAS
No. 128, the basic and diluted loss per common share were computed as follows:


                                        6


<PAGE>

<TABLE>
<CAPTION>

      YEAR-TO-DATE EPS CALCULATIONS
                                                         2000               1999
                                                     -----------        -----------
<S>                                                 <C>               <C>
         Net earnings (loss)                         $   113,000        $  (56,000)
         Weighted average common shares outstand       2,811,590         2,811,590
         Incremental shares                                 --                --

         Basic earnings (loss) per share             $       .04        $     (.02)
         Diluted earnings (loss) per share           $       .04        $     (.02)

</TABLE>

         No incremental shares are included in the EPS calculations for 2000
         because the market price of Torotel's common stock is lower than the
         exercise price of the stock options under contract. No incremental
         shares are included in the EPS calculations for 1999 due to the net
         loss.

<TABLE>
<CAPTION>

                                                          2000           1999
                                                       ---------      ---------
<S>                                                  <C>            <C>
      QUARTERLY EPS CALCULATIONS
         Net earnings                                  $   62,000     $   20,000
         Weighted average common shares outstanding     2,811,590      2,811,590
         Incremental shares                                  --             --


         Basic earnings per share                      $      .02     $      .01
         Diluted earnings per share                    $      .02     $      .01

</TABLE>

         No incremental shares are included in the EPS calculations for either
         period because the market price of Torotel's common stock is lower than
         the exercise price of the stock options under contract.


Note 7 - Employee Stock Options

      In accordance with the Incentive Compensation Plan approved by
stockholders on September 19, 1994, Torotel reserved 400,000 common shares for
issuance to key employees pursuant to the exercise of incentive and
non-qualified stock options granted prior to June 20, 2004. The options are
accounted for under APB Opinion 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES,
and related Interpretations. The incentive stock options have a term of five
years when issued and vest 50% per year at the end of each of the first two
years. The non-qualified stock options have a term of ten years when issued and
vest 25% per year at the end of each of the first four years. The exercise price
of each option equals the market price of Torotel's common stock on the date of
grant. Accordingly, no compensation cost will be recognized upon the grant of
any options.

      As of October 31, 2000, there were no options outstanding under this Plan.
The fair values of the options granted previously were estimated on the date of
grant using the Black-Scholes options-pricing model. The fair value of the
incentive stock options was determined using the following weighted average
assumptions: no dividend payments over the life of the options; expected
volatility of 106.1%; risk-free interest rate of 6.94%; and expected life of
five years. The fair value of the non-qualified stock options was determined
using the following weighted average assumptions: no dividend payments over the
life of the options; expected volatility of 106.1%; risk-free interest rate of
6.6%; and expected life of ten years.


                                        7


<PAGE>

      Stock option transactions under the 1994 Incentive Compensation Plan for
each period are summarized as follows:

<TABLE>
<CAPTION>
                                                           2000                                  1999
                                               -----------------------------        ----------------------------
                                                 Weighted                             Weighted
                                                  Shares           Average             Shares           Average
                                                  Under           Exercise             Under           Exercise
                                                  Option            Price              Option            Price
                                                ----------      -------------        ----------      -------------
<S>                                         <C>               <C>                 <C>               <C>
      Outstanding at beginning of period            -               -                  7,500            $1.00
      Granted                                       -               -                    -                -
      Exercised                                     -               -                    -                -
      Forfeited                                     -               -                    -                -
                                                ----------                           ----------
      Outstanding at end of period                  -               -                  7,500            $1.00
                                                ==========                           ==========
</TABLE>

Note 8 - Stock Warrants

      Pursuant to a settlement that ended a class action alleging racial
discrimination in hiring by Torotel Products, Inc., Torotel agreed to issue a
warrant certificate to the Torotel Settlement Fund to purchase 100,000 shares of
Torotel, Inc. common stock at $.75 per share. The warrant is 100% vested upon
issuance and cannot be exercised until the market price of Torotel's common
stock reaches $2.00 per share. The warrant expires on May 4, 2003.

      The $33,000 fair value of the warrant was estimated on the date of grant
using the Black-Scholes options-pricing model using the following weighted
average assumptions: no dividend payments over the life of the warrant; expected
volatility of 75.9%; risk-free interest rate of 5.8%; and expected life of two
years.

      Stock warrant transactions for each period are summarized as follows:

<TABLE>
<CAPTION>

                                                             2000                                1999
                                               ------------------------------       ------------------------------
                                                Weighted                             Weighted
                                                 Shares           Average             Shares           Average
                                                  Under           Exercise             Under           Exercise
                                                 Option            Price              Option            Price
                                                ---------      --------------       ---------       --------------
<S>                                         <C>               <C>                 <C>             <C>
      Outstanding at beginning of period        100,000           $  .75             100,000           $  .75
      Granted                                       -                -                   -                -
      Exercised                                     -                -                   -                -
      Forfeited                                     -                -                   -                -
                                                --------                            --------
      Outstanding at end of period              100,000           $  .75             100,000           $  .75
                                                ========                            ========

      Warrants exercisable at end of period         -                -                   -                -
      Weighted average fair value of
        warrants granted during the year                             -                                    -
</TABLE>

The following information applies to warrants outstanding at October 31, 2000:

<TABLE>
<S>                                                               <C>
           Number outstanding                                            100,000
           Range of exercise prices                                       $  .75
           Weighted average exercise price                                $  .75
           Weighted average remaining contractual life                 2.50 yrs.
</TABLE>

                                        8
<PAGE>


Note 9 - Note Payable to Former Officer

      On May 6, 1997, Torotel Products, Inc. was accepted into the Voluntary
Disclosure Program of the United States Department of Defense, resulting from
its failure to perform some required "thermal shock" testing as frequently as
required, and inaccurately certifying that all required testing had been
performed. On June 27, 2000, Torotel Products entered into a Release and
Settlement Agreement with the United States of America. Pursuant to the
agreement, Torotel Products agreed to pay an aggregate total of $100,000 over a
nineteen-month period. The legal fees associated with the testing deficiencies
have amounted to $2,000 during the current fiscal year, $8,000 in fiscal 2000,
and $282,000 in aggregate since the investigation began in the third quarter of
the fiscal year ended April 30, 1997.

      Torotel believes that certain of its former officers may have been
responsible for the misconduct related to the test failures, and are evaluating
ways of recovering the costs and damages. Torotel has suspended all principal
and interest payments due under a note payable to a former officer since
February 1997. As a result, as of October 31, 2000, the aggregate amount due of
$541,000, which consists of the outstanding principal of $384,000 plus the
accrued interest of $157,000, has been classified as a long-term liability in
the accompanying consolidated balance sheet.


Note 10 - Discontinued Subsidiary

      The operations of East Coast Holdings, Inc. (formerly named OPT
Industries, Inc.), a wholly owned subsidiary of Torotel, were discontinued in
April 1999, and the assets sold to SIGMA Associates, L.L.C. The remaining assets
and liabilities related to this subsidiary as of October 31, 2000, are included
in the accompanying consolidated balance sheet under the following captions and
in the amounts shown:

<TABLE>

<S>                                                                       <C>
                Current maturity of note receivable                          $    136,000
                Note receivable, less current maturity                       $    240,000
                Current maturities of long-term debt                         $     81,000
                Trade accounts payable                                       $    446,000
                Accrued liabilities                                          $    159,000
                Long-term debt, less current maturities                      $    146,000

</TABLE>

Note 11 - Note Receivable

      Under the original terms, the note receivable from SIGMA Associates,
L.L.C. accrued interest at a fixed rate of 8% per annum. However, because of
some late payments received beyond the normal 15-day grace period, Torotel
exercised its right under the terms of the note to invoke the default rate of
interest, which is 5% per annum above the prevailing rate. As a result, the
effective rate of interest on the note is now 13% per annum. As of October 31,
2000, all required payments have been received.



                                        9


<PAGE>


Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION


      The following management comments regarding Torotel's results of
operations and outlook should be read in conjunction with the Consolidated
Financial Statements included pursuant to Item 1 of this Quarterly Report. The
discussion and analysis of the results of operations include the operations of
Torotel, Inc. and its subsidiary, Torotel Products, Inc.


SIX MONTHS ENDED OCTOBER 31, 2000 VERSUS SIX MONTHS ENDED OCTOBER 31, 1999

      Net sales increased 2% from $1,663,000 to $1,695,000 because of higher
sales of the potted coil assembly for the Hellfire II missile system. There were
no shipments of these assemblies during the first quarter last year, since sales
are limited to the number of Hellfire II missiles sold to foreign countries by
the prime contractor. Torotel has a $159,000 backlog for this product, which is
scheduled to ship over the next few quarters. As a result of this factor, plus a
34% increase in order bookings for magnetics products during the first half of
fiscal 2001, slightly higher sales are expected in fiscal year 2001.

      Gross profit as a percentage of net sales increased nearly 9% because of
lower material and labor costs associated with the product mix and improved
labor productivity resulting from ongoing efforts to increase throughput and
reduce cycle times.

      Engineering expenses decreased nearly 7% from $90,000 to $84,000 because
of a decrease in payroll costs due to a reduction in full-time personnel.
Management does not anticipate any significant change in the present level of
engineering expenses.

      Selling, general and administrative (SG&A) expenses increased slightly.
The SG&A expenses of Torotel, Inc. increased 49% from $53,000 to $79,000 due to
a $17,000 increase in professional fees and a $9,000 increase in investor
relations costs associated with printing and mailing requirements for the annual
shareholders meeting. The SG&A expenses of Torotel Products decreased nearly 8%
from $333,000 to $308,000 primarily because of the decrease in payroll costs
from both a reduction in full-time personnel and the outsourcing of certain
functions. Management does not anticipate any significant change in the present
level of SG&A expenses.

      Interest expense decreased nearly 4%. The interest expense of Torotel,
Inc. decreased 9% from $34,000 to $31,000 because of a lower principal balance
on the guaranteed note with Vista Bank. The interest expense of Torotel Products
increased nearly 5% from $22,000 to $23,000 because of the accrual of interest
on the note payable to the Torotel Settlement Fund.

      Interest income remained the same.

      Sundry non-operating income increased because of late fees collected
pursuant to the terms of the note receivable from SIGMA Associates, L.L.C.

      For the reasons discussed above, the consolidated pretax earnings
increased from a loss of $56,000 to a profit of $113,000. The pretax loss of
Torotel, Inc. increased from $69,000 to $90,000. The pretax earnings of Torotel
Products increased from $13,000 to $203,000.


                                       10


<PAGE>


THREE MONTHS ENDED OCTOBER 31, 2000 VERSUS THREE MONTHS ENDED OCTOBER 31, 1999

      Net sales decreased 4% from $874,000 to $840,000 because of lower
shipments of Torotel's magnetics products. The lower shipments resulted from a
lower shippable backlog at the beginning of the quarter.

      Gross profit as a percentage of net sales increased nearly 6% because of
lower material and labor costs associated with the product mix and improved
labor productivity resulting from ongoing efforts to increase throughput and
reduce cycle times.

      Engineering expenses decreased nearly 7% from $45,000 to $42,000 because
of a decrease in payroll costs due to a reduction in full-time personnel.
Management does not anticipate any significant change in the present level of
engineering expenses.

      Selling, general and administrative (SG&A) expenses increased slightly.
The SG&A expenses of Torotel, Inc. increased 83% from $23,000 to $42,000 due to
a $11,000 increase in professional fees and an $8,000 increase in investor
relations costs associated with printing and mailing requirements for the annual
shareholders meeting. The SG&A expenses of Torotel Products decreased nearly 11%
from $171,000 to $153,000 primarily because of a $10,000 decrease in payroll
costs from both a reduction in full-time personnel and the outsourcing of
certain functions, and an $8,000 decrease in computer training costs. Management
does not anticipate any significant change in the present level of SG&A
expenses.

      Interest expense remained the same for both Torotel, Inc. and Torotel
Products, Inc.

      Interest income increased 11% because of a rate increase on the note
receivable from SIGMA Associates, L.L.C., which was part of the consideration
received from the sale of substantially all the assets of East Coast Holdings,
Inc. (formerly named OPT Industries, Inc.). The rate increase was triggered by
late payments on the note.

      Sundry non-operating income increased because of late fees collected
pursuant to the terms of the note receivable from SIGMA Associates, L.L.C.

      For the reasons discussed above, the consolidated pretax earnings
increased from $20,000 to $62,000. The pretax loss of Torotel, Inc. increased
from $30,000 to $46,000. The pretax earnings of Torotel Products increased from
$50,000 to $108,000.


LIQUIDITY AND CAPITAL RESOURCES

      Torotel has operated without a revolving credit line since December 1998.
Since that time, Torotel has relied on funds generated internally to meet its
normal operating requirements and to service bank indebtedness. While continuing
operations have provided cash in the last three years, the uncertainty
surrounding the outstanding liabilities associated with (i) a terminated merger
in fiscal 1999; (ii) the trade debt of a discontinued subsidiary (see Note 10 of
Notes to Consolidated Financial Statements); and (iii) the note and interest
payable to a former officer (see Note 9 of Notes to Consolidated Financial
Statements), raises doubt about Torotel's ability to continue as a going
concern. While there is no immediate plan to secure any new financing or
capital, management continues to evaluate ways of improving Torotel's liquidity.

      During the six months ended October 31, 2000, Torotel's operations
provided $68,000 in cash flow because of pretax earnings.

      Investing activities provided $65,000 in cash flow because of proceeds
from the note receivable from


                                       11


<PAGE>


SIGMA Associates, L.L.C. While Torotel did not have any capital expenditures
during the six months ended October 31, 2000, it does anticipate approximately
$20,000 in capital expenditures during the balance of fiscal 2001.

      Financing activities used $88,000 in cash flow because of decreases in
long-term debt.

      Management believes that inflation will have only a minimal effect on
future operations since such effects will be offset by sales price increases,
which are not expected to have a significant effect upon demand.


Year 2000 Update

      Torotel did not experience any Year 2000 difficulties as of January 1,
2000, nor from that date through the filing date of this report. Management had
determined that Torotel's hardware and software applications were Year 2000
compliant based on extensive testing and vendor certifications. In addition,
management had polled its significant suppliers and customers and, based on
these responses, had determined that its operation did not appear to be
vulnerable to a third parties' failure to remediate their own Year 2000 issues.
Management also tested various equipment items to verify their Year 2000
functionality.

         Torotel did not incur any external costs for its Year 2000 readiness
reviews and assessments. Internal costs were not tracked separately; however,
these costs were minimal and limited to related payroll costs for certain
internal employees and postage for the mailing of questionnaires to suppliers
and customers.


Other

      Except for historical information contained herein, certain of the matters
discussed above are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and are subject to the safe harbor
created by that Act. These statements are based on assumptions about a number of
important factors and involve risks and uncertainties that could cause actual
results to be different from what is stated here. These risk factors are:
decreased demand for products, delays in developing new products, expected
orders that do not materialize, loss of key customers, the impact of competition
and price erosion as well as supply and manufacturing constraints, and other
risks and uncertainties.



                                       12
<PAGE>

                           PART II. OTHER INFORMATION


Item 1.    Legal Proceedings

      On May 6, 1997, Torotel Products, Inc. was accepted into the Voluntary
Disclosure Program of the United States Department of Defense, resulting from
its failure to perform some required "thermal shock" testing as frequently as
required, and inaccurately certifying that all required testing had been
performed. On June 27, 2000, Torotel Products entered into a Release and
Settlement Agreement with the United States of America. Pursuant to the
agreement, Torotel Products agreed to pay an aggregate total of $100,000 over a
nineteen-month period. The legal fees associated with the testing deficiencies
have amounted to $2,000 during the current fiscal year, $8,000 in fiscal 2000,
and $282,000 in aggregate since the investigation started in the third quarter
of the fiscal year ended April 30, 1997.

      Torotel believes that certain of its former officers may have been
responsible for the misconduct related to the test failures, and are evaluating
ways of recovering the costs and damages. Torotel has suspended all principal
and interest payments due under a note payable to a former officer since
February 1997. As a result, as of October 31, 2000, the aggregate amount due of
$541,000, which consists of the outstanding principal of $384,000 plus the
accrued interest of $157,000, has been classified as a long-term liability in
the accompanying consolidated balance sheet.

      The remaining liabilities related to a discontinued subsidiary include
trade accounts payable of $446,000 (see Note 10 of Notes to Consolidated
Financial Statements). Several claims have been filed by vendors for collection
of amounts due, and more are expected to be filed. Since the discontinued
subsidiary's remaining assets have been assigned as collateral for the remaining
bank debt and the debt owed to the United States, and all remaining proceeds are
targeted for unpaid payroll taxes, this subsidiary has no other source of income
to satisfy its trade debt obligations. This trade debt remains the sole
responsibility of this subsidiary. Neither Torotel, Inc. or Torotel Products,
Inc. has assumed these obligations. While the claims by vendors may result in
judgments against the discontinued subsidiary, neither Torotel, Inc. or Torotel
Products, Inc. intends to provide any funds to satisfy the judgments.

Item 4.    Submission of Matters to a Vote of Security Holders

      The annual meeting of stockholders was held in Grandview, Missouri, on
Monday, September 18, 2000, to elect a Board of Directors. At the meeting, there
were 2,416,351 shares voting, with nominees needing 1,208,176 shares to be
elected. Stockholders elected the following individuals to a one-year term on
the Board of Directors, with the number of shares voting "FOR" each nominee
indicated.

                   Dale H. Sizemore, Jr.        2,385,149
                   Richard A. Sizemore          2,385,149
                   H. James Serrone             2,395,883

Item 6.   Exhibits and Reports on Form 8-K

a)    Exhibit 27 -- Financial Data Schedule (electronic filings only)
b)    Reports on Form 8-K -- There were no reports filed on Form 8-K during
      the three months ended October 31, 2000.

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<PAGE>


                                   SIGNATURES


      In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


Torotel, Inc.
(Registrant)




Date:   December 8, 2000                 /s/  H. James Serrone
      --------------------               ---------------------------------------
                                              H. James Serrone
                                              Vice President of Finance and
                                              Chief Financial Officer



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